Cato Op-Eds

Individual Liberty, Free Markets, and Peace
Subscribe to Cato Op-Eds feed

A call for new low-yield nuclear weapons in the Trump administration’s Nuclear Posture Review (NPR) has generated a good deal of controversy and debate among American experts, and for good reason. However, there has been little attention paid to the assumptions that undergird the arguments made in the NPR to justify such capabilities. Flawed assumptions lead to flawed policy prescriptions, and the NPR’s assumptions are shaky at best. Congress should not move forward on the administration’s wish list of low-yield nuclear weapons without rigorously questioning the faulty assumptions made in the 2018 NPR.  

The first key assumption in the new NPR is that the international threat environment facing the United States has worsened considerably since the last review was released in 2010. Unlike the last NPR, which downplayed the role nuclear weapons played in U.S. strategy, the new NPR argues that the growing nuclear capabilities and sharp elbows of America’s adversaries create a compelling need for a tailored and flexible nuclear arsenal. Low-yield nuclear weapons are not intended for “nuclear war-fighting,” the NPR argues, but are meant to bolster deterrence by convincing adversaries that they will not gain a decisive advantage from their own nuclear weapons.

The chief problem with this assumption is that it views deterrence as a contest of capabilities while ignoring the role of interests. In other words, the new NPR implies that capability gaps in the U.S. nuclear arsenal encourage bad behavior from other countries while downplaying the role stakes play in an adversary’s cost-benefit calculation. Credible deterrence requires the United States to make an adversary believe that it will face higher costs than benefits if the target takes an action that the United States is trying to prevent. U.S. nuclear capabilities are one part of this equation, but if the target believes that it has vital interests at stake then it may act regardless of U.S. threats. Low-yield nuclear weapons will impact the cost-benefit calculation of U.S. adversaries, but they probably won’t deter the kinds of actions that have vexed Washington in recent years. For example, the United States was unable to deter China’s island-building activities in the South China Sea and Russia’s annexation of Crimea because in both instances the other countries had greater interests at stake than the United States.

Nuclear weapons are useful tools for deterring things like a nuclear attack against the United States or a Russian attack against NATO, but such actions can be deterred without more low-yield nukes. However, nuclear weapons—regardless of their yield—are poorly suited for preventing other nuclear states from pursuing interests that are much more important for them than the United States.

Another faulty assumption in the NPR is related to Russia’s nuclear strategy. The NPR states that Russia’s “escalate to deescalate” nuclear strategy is a serious threat that requires new U.S. nuclear capabilities to solve. Under the “escalate to deescalate” strategy, Moscow would use or threaten to use low-yield nuclear weapons in a conflict with NATO in order to end the conflict on favorable terms. Therefore, the United States must have new low-yield nuclear weapons of its own in order to prevent Russia from using the threat of limited nuclear escalation to coerce the United States or its allies.

The NPR’s assumptions about “escalate to deescalate” ignore recent developments in Russian military capabilities that suggest “escalate to deescalate” no longer reflects Russian nuclear thinking. Moscow’s economic and military weakness following the end of the Cold War led to greater reliance on nuclear weapons and lower thresholds for nuclear use in order to deter a much stronger NATO. While Russia still lags behind the United States and NATO in military technology, Moscow’s conventional military power and asymmetric capabilities—such as cyber and electronic warfare—have grown much strong over the past decade. Russia has not abandoned the possibility of using nuclear weapons first in a conflict, but U.S. fears over “escalate to deescalate” gloss over the changes that Russia has made to reduce its dependence on nuclear weapons in recent years.

The Trump administration’s NPR makes nuclear strategy based on important assumptions about the state of the world and the nuclear strategies of U.S. adversaries. These assumptions—and the policy solutions that flow from them—must be rigorously questioned in order to craft an effective U.S. nuclear strategy. The case for new low-yield nuclear weapons made in the NPR rests on shaky assumptions about what nuclear weapons are capable of deterring and the characteristics of Russia’s nuclear strategy. 

At 12:51pm on January 18, 2018–just a day before it was set to expire–the Senate followed the House’s lead and reauthorized the Foreign Intelligence Surveillance Amendments Act (FAA) Section 702 mass surveillance program for another six years by a vote of 65-34.

Writing for JustSecurity.org in October 2017, I made this prediction about the then-looming debate over extending the mass surveillance authority embodied in Section 702: 

Absent another Snowden-like revelation, Section 702 of the FAA will be reauthorized largely without change, and any changes will be cosmetic, and almost certainly abused. Whether it has a “sunset” provision or not is now politically and practically meaningless.

As it turns out, that prediction was optimistic. But first, a recap of the events of this week.

The real drama took place Tuesday evening, when Senate Majority Leader Mitch McConnell (R-KY) held open the procedural vote to end debate on the underlying Section 702 bill, S. 139, by some 90 minutes. The last two holdouts–John Kennedy (R-LA) and Claire McCaskill (D-MO) were worked over by anti- and pro-Section 702 forces on the Senate floor, with Senate Intelligence Committee Chairman Richard Burr (R-NC) calling in reinforcements in the form of Director of National Intelligence Dan Coats to help strong-arm Cassidy and McCaskill into voting to end debate on the bill. The pressure worked, with McCaskill providing the key vote to kill any chance of amending a bill that Senators Ron Wyden (D-OR) and Rand Paul (R-KY) declared was a direct threat to the Fourth Amendment rights of Americans.

Speaking after the procedural vote to kill debate on S. 139, Kennedy told reporters, “I was undecided when I walked on the floor, but the program expires Friday, and I don’t want to play with fire. This is an important program.”

Kennedy’s “playing with fire” reference was a clear manifestation of the political fear he felt. After admitting he was undecided, he elected to be swayed by that fear–fear that the program would lapse without his vote. Fear stoked by the presence of DNI Coats, hovering just off of the Senate floor. Fear that if anyone died in a Salafist-initiated domestic terrorist attack in the period of time between the program’s alleged expiration and renewal, he (Kennedy) would be blamed for it. His Missouri colleague, McCaskill, who is up for reelection this year in what will no doubt be a tough fight in a state Trump won in 2016, probably went through exactly the same things in her mind before casting the deciding vote to end debate and move S. 139 forward–with no chance to amend it. 

But would the Intelligence Community have have “gone dark” if the Senate had elected to continue debate beyond January 19 and allow amendments to the bill? No.

FISA Court orders issued under Section 702 are generally a year in length, which means that any orders issued prior to the technical legal expiration date would’ve been valid for another 12 months. Additionally, Section 702 is not the only authority under which the National Security Agency (NSA) can collect foreign intelligence information. Executive Order 12333, originally issued during the first Reagan administration, provides sweeping overseas intelligence collection authority that, at present, is not subject to any judicial review.

Indeed, it’s EO 12333 that makes possible programs like RAMPART-A, as revealed in the Snowden Archive and reported by The Intercept in 2014:

It has already been widely reported that the NSA works closely with eavesdropping agencies in the United Kingdom, Canada, New Zealand, and Australia as part of the so-called Five Eyes surveillance alliance. But the latest Snowden documents show that a number of other countries, described by the NSA as “third-party partners,” are playing an increasingly important role – by secretly allowing the NSA to install surveillance equipment on their fiber-optic cables.

The NSA documents state that under RAMPART-A, foreign partners “provide access to cables and host U.S. equipment.” This allows the agency to covertly tap into “congestion points around the world” where it says it can intercept the content of phone calls, faxes, e-mails, internet chats, data from virtual private networks, and calls made using Voice over IP software like Skype.

Not surprisingly, Senator Burr failed to mention these facts during his pitch to his colleagues to renew the Section 702 program on Tuesday or today.

Also on Tuesday, Burr made the following assertions:

Let me just say from the start, this is the single most reviewed program that exists in the Federal Government. This is reviewed congressionally–it is reviewed by the courts, it is reviewed by the DNI, it is reviewed by the inspector general and the Department of Justice–because, on the committee, we realize this requires not just the stamp of approval from Congress but the assurance by the Intelligence Committee and by every branch of government that it lives within the parameters we set.

Let’s examine each of these claims in turn.

Congressional review: Because House and Senate Intelligence Committee proceedings take place in secret, the public has no access to the committee hearing transcripts. We don’t how exacting the questioning is, whether a committee had to employee a subpoena to get documents or witness cooperation, or what independent inquiries–like the Senate Intelligence Committee investigation into the CIA’s torture program–have actually been conducted into Section 702 or any other program. This secrecy is only partly necessary. It should be possible to at least get declassified summaries of the issues and problems involving these programs that have actually been examined in depth without compromising any legitimately classified sources or methods. That we are not is a red flag.

FISA Court review: How effective is the FISA Court in preventing Fourth Amendment violations of Americans rights under the Section 702 program? Not very, as the activist group Demand Progress noted in a report issued in 2017. As the Demand Progress press release stated, “The report identifies overreaches by the Intelligence Community. These include Constitutional problems, unauthorized information collection, failure to comply with FISA Court orders, failure to provide notice to defendants, and mismanagement of acquired data.”

Neither Senator Burr or any other Section 702 supporter referenced these violations during debate over S. 139.

DNI review: The DNI is a program proponent, not an objective overseer. DNI Coats’ presence just off the Senate floor was designed to ensure ultimate passage of the underlying bill. Burr’s assertion here does not pass the “laugh test.”

IG review (including DoJ): The last Section 702 Department of Justice Inspector General compliance report was issued in 2012, and was only declassified in part due to litigation by the New York Times. Thus, the public has no idea whether additional compliance reports have actually been produced, much less what they’ve found. Moreover, recent reporting by investigative journalist Jenna McLaughlin at Foreign Policy raises disturbing questions about the very integrity of Inspector General offices across the Intelligence Community, including the Intelligence Community Inspector General office itself. Not only is Burr not on the letter requesting a Government Accountability Office (GAO) review of the allegations, he made no mention of the controversy during his remarks on Section 702 reauthorization.

The fact that Burr does not appear to be interested in ensuring that IC whistleblowers can come forward to safely report problems with Section 702 or other surveillance programs makes a mockery of his claims that any IG examination of Section 702 can be trusted.

I began this piece by noting that my prediction last October that Section 702 would be reauthorized with minimal or cosmetic changes had proved optimistic. The Brennan Center’s description of the actual effects of S. 139 tell the tale:

When Congress reauthorizes Section 702 of FISA—a law intended to authorize surveillance of foreigners only—it should take the opportunity to shore up privacy protections for Americans. S. 139 does the opposite. It codifies the government’s practice of “backdoor searches” without any meaningful restriction. It also authorizes an expanded form of “abouts” collection. It thus leaves Americans’ privacy more vulnerable, not less. 

Burr and other Section 702 reauthorization proponents have also asserted that the program does not deliberately target Americans–that any communications of Americans swept up in Section 702 dragnet are “incidentally” collected. But there’s nothing “incidental” about deliberately targeting people–including Americans at home or abroad–who use the Tor anonymity tool for online browsing–something NSA has been doing for at least a decade. And as the Section 702 “minimization” procedures approved by then-Attorney General Eric Holder in 2009 make clear, NSA can keep and analyze any domestic U.S. communications acquired that employ any form of encryption:

With the growing number of Americans utilizing apps like Signal, Wickr, and similar encrypted messaging apps, it means the total number of Americans NSA can target for simply using encryption to protect their privacy will grow.

And if NSA can’t figure out for sure if you are, in fact, a U.S. citizen, they will target you until they can prove otherwise:

The bill the Senate just passed and that President Trump will sign makes all of these problems worse. It’s another tragic example of the triumph of fear over liberty in the Digital Age. 

 

The Trump Administration recently ordered the Department of Homeland Security (DHS) to stop issuing H-2A visas for temporary agricultural work to Haitians.  One of the reasons given for not allowing Haitians to use the visas was their high overstay rate of about 40 percent in 2016, meaning that about 40 percent of Haitian workers on the H-2A did not leave at the end of the season as they were supposed to.  Depending exactly how overstay rates are calculated, they normally range from about 1 to 3.5 percent for workers on H-2A visas. 

One reason the H-2A overstay rate is so low is that workers have an excellent chance of coming back year after year if they abide by the rules of the program but, if they overstay or otherwise break the rules, then their chance of earning the visa in the future drops to near zero.  However, if the chance of coming back in future years is low because the government could cancel the program then many rational Haitian workers would choose to overstay.  That is likely what happened in the example of the Haitian H-2A visa workers.

Economists Michael Clemens and Hannah Postrel wrote a preliminary impact evaluation in February 2017 of allowing Haitians to use the H-2A visa.  The government granted only a handful of Haitians visas to work in the United States in 2015 and 2016.  Clemens and Postrel report that all of the workers in 2015 returned to Haiti as scheduled.  They wrote:      

As they vetted potential participants, association leaders were aware that continued participation in the program would be jeopardized if a substantial number of workers overstayed their visas. In the event, all of the workers who traveled.       

Clemens and Postrel didn’t mention the overstay rate for the Haitians who entered in 2016 as that data wasn’t available yet (they were writing the paper in 2016).  But if the reports are true that the Haitian H-2A overstay rate jumped to 40 percent in 2016, then it is likely that the workers suspected that the program was going to be canceled under the next administration and that this was their only chance to stay in the United States.  The expected loss in lifetime income from the possibility that Trump would win and shut down the program was so great that 40 percent of them decided to take their chances in the black market and scuttle any future chance that they would receive another legal guest worker visa.

This is a wonderful example of how government actions have unintended consequences.  Haitians are rational economic actors.  If the goal is to keep overstay rates low, then the government needs to make it easy for migrants to earn visas today and to credibly commit to issuing them in the future.      

President Trump is backing the Securing America’s Future (SAF) Act drafted by key House Republicans. The SAF Act is a comprehensive immigration reform bill posing as a DACA fix. It is 414 pages long and touches on every major area of the immigration system—family, employment, and diversity legal immigration, humanitarian programs, workplace enforcement, temporary visas, interior enforcement, border security, criminal penalties, and much else. Comprehensive immigration reform is fine, but this massive, complex bill expands the scope of the debate so far from DACA that it cannot seriously be considered an answer to this relatively small immigration issue.

In any case, SAF’s negative provisions outweigh its positive ones. The good leaves much to be desired, and the bad is about as bad as it gets.

Positive Provisions

DACA recipients receive a nonimmigrant status that can be renewed indefinitely (p. 384). The failure to grant them permanent residency with a pathway to citizenship refuses to recognize them for what they are: Americans. But it is still better than the Senate Republican proposal that would grant just a three-year visa that is not renewable, and SAF would also allow them to adjust to permanent residency if sponsored by an employer. This is good, but because the bill does nothing about the per-country limits, sponsorship will just end up creating a huge backlog for green cards for Mexican workers, like the H-1B has for Indian workers. Nonetheless, legal status would allow Dreamers to increase their earnings and encourage them to invest in skills that benefit the United States. Keeping the immigrants here will benefit taxpayers because they will pay more in taxes than they receive in benefits over their lifetimes.

The bill’s guest worker program for 500,000 agricultural workers would reduce illegal immigration while providing a source of legal labor for farms (p. 22). I have previously explained and praised this specific proposal here. Still, the fact that the bill fails to provide any work visas for other industries is a shortcoming.

The 55,000 new employment-based green cards will benefit the economy and provide some small relief for skilled immigrants waiting in the decades-long backlog for green cards (p. 21). It also allows children of green card applicants to remain in line until they are 25 (p. 7), partially resolving the problem of “aging out” for some young immigrants—a phenomenon I’ve written about here. Increasing the number of CBP officers to screen travelers at ports of entry (p. 319) and modernizing ports of entry (p. 350) are overdue changes and benefit the economy by easing trade with Mexico and Canada. From a fiscal standpoint, giving parents of U.S. citizens nonimmigrant visas without the opportunity to obtain federal benefits instead of green cards is positive, but the bill senselessly bans the parents from working.

Negative Provisions

By far the worst aspect of the SAF Act cuts overall legal immigration by 25 percent—some 2.6 million people per decade (pp. 5-21). Given how fiscally and economically positive the average immigrant to the United States is, this is a huge unnecessary blow to the economy. Eliminating the random diversity visa lottery is welcome, but unlike the bipartisan Senate deal—which replaces it with a merit-based system—SAF simply eliminates those green cards. Even ending the other family based categories might be worth swallowing if the bill shifted the numbers to the employment-based side. But the employment-based increase is just 55,000 compared to a reduction of more than 315,000 elsewhere.

SAF also changes asylum law to make it more difficult for asylum seekers to apply by greatly increasing the standard of proof to apply for asylum (p. 23). I have previously written about how these changes will make it virtually impossible for asylum seekers who don’t already have attorneys waiting for them and evidence gathered to prove their claims to even apply for asylum.

The worst enforcement provision is criminalizing simply being in the United States without status or violating any aspect of civil immigration law (p. 170). This would turn millions of unauthorized immigrants into criminals overnight. It would also criminalize legal immigrants who fail to update their addresses, carry their green card with them at all times, or otherwise abide by the million inane regulations that Congress imposes on them. This would immediately undo much of the progress that the feds have made on criminal justice reform and reducing its prison population.

Several other security provisions are also problematic. Mandatory E-Verify (p. 87) will impose massive regulatory costs on small businesses, establish a federal national identification system that includes all U.S. workers, and cause hundreds of thousands of Americans to have their jobs delayed or lost entirely due to database errors—all while having a track record of failure in every state that has tried to use it to prevent illegal employment. My detailed comments on this specific E-Verify proposal are here.

Biometric exit (p. 356) is a multi-billion dollar boondoggle that would add absolutely nothing to security while imposing huge costs of travelers and intruding into Americans privacy. Increasing the number of Border Patrol agents by 25% at a time when each agent is already catching less than two crossers per month makes no sense (p. 319). Authorizing states to use the National Guard along the border on the U.S. taxpayer dime is another proven waste of money (p. 286)—even Border Patrol says so.

The bill authorizes spending of $124 billion over five years on border security alone (p. 348). The bill makes little effort to find a means to pay for this gargantuan sum. For comparison, the entire Border Patrol budget last year was $3.8 billion.

An infeasible trade

Republicans are essentially asking Democrats to trade the legalization of 700,000 unauthorized immigrants for the criminalization of all others, banning 2.6 million legal immigrants over the next decade, the elimination of all family sponsorship categories and the diversity visa lottery, deporting tens of thousands of asylum seekers, huge increases in border security spending, a massive new regulatory program that applies to every employee and employer in the country (“E-Verify”), and so much else. This bill has no chance of becoming law, but it is a remarkable illustration of how far apart the parties are on this issue.

One of the leading critiques against President Trump’s foreign policy is that it smacks of global retreat and constitutes a U.S. withdrawal from the leading role it has played in the so-called “liberal world order.” As I explain in an op-ed in the New York Post today, that critique is unfounded.

I cite Joe Scarborough lamenting Trump’s “dangerous retreat from the world,” and Evan Osnos who, in a recent piece in The New Yorker, claimed, “President Trump is reducing U.S. commitments abroad.” Likewise, Hal Brands, who worked on foreign policy strategy in the Obama administration and is now a professor at Johns Hopkins SAIS, broods that Trump “is clearly attracted to something like Fortress America,” a vision that fuses anti-free trade economic nationalism with a withdrawal from U.S. alliances and overseas military presence. The Senate Appropriations Committee even released a report in September criticizing “the administration’s apparent doctrine of retreat.”

While it is clear Trump’s foreign policy disdains multilateralism and harbors contempt for engaged diplomacy, it is profoundly misleading to suggest there has been any kind of retreat from the world. As I explain in the piece, Trump “hasn’t backed away from any theater in which the U.S. military was committed or engaged at the time of his inauguration,” and in many cases, he has deepened America’s foreign entanglements.

One data point that I wasn’t able to include in the piece was the latest news, announced by Secretary of State Rex Tillerson yesterday, that the Trump administration is committing to an indefinite U.S. military presence in Syria. As of today, there are about 2,000 U.S. troops in Syria and Tillerson laid out their mission to include fighting terrorism, saving the Syrian people from Bashar al-Assad, and countering Iranian influence, among other tasks.

Aside from serving as yet more evidence that President Trump is a committed interventionist who has increased, not decreased, U.S. security commitments abroad, it is notable how the administration can announce this new indefinite military commitment in Syria without even pretending to seek Congressional approval or present it as a matter of debate to the public. Much like Trump’s bombing of a Syrian base in April, Congress has not authorized any kind of new open-ended military mission in Syria. Nor does the United States have the permission of the host government, which means it lacks legal sanction internationally, too (not to mention how blatantly this contradicts the Trump team’s emphasis on respect for national sovereignty).

Another endless counter-insurgency campaign in a chaotic post-conflict Syria is hardly a recipe for success. And the notion that this open-ended deployment can effectively counter Iranian influence in Syria is dubious considering the far more robust Syria-Iran-Russia alignment. Equally dubious is the idea that Iranian influence in Syria is a strategic concern that even merits U.S. action in the first place.

In fact, the blowback from this policy has already begun. U.S. troops are located largely in Kurdish-held areas of northeastern Syria and reports initially indicated U.S. plans to develop an independent Kurdish militia force. The response from our NATO ally Turkey, which has long battled Kurdish separatists in its own southeast, near the Syrian border, was vociferous (the White House partially backpedaled in response). President Erdogan pledged to “strangle it,” which suggests Turkey would join with virtually every other state with a stake in the region to counter the U.S. mission in Syria by any means.

Anyone who believes a new military commitment in Syria, predicated on a laundry list of vague, indeterminate, and futile missions, is likely to go off without a hitch hasn’t been paying attention to the last 20 years of U.S. foreign policy in the Middle East. And anyone who continues to suggest President Trump is retreating from the world is simply in denial. 

In early September 2013, Americans rose up in opposition to the suggestion that the United States might undertake a limited military operation to punish Syrian President Bashar al Assad for using chemical weapons in the civil war there.

Even though Secretary of State John Kerry gave assurances that the punitive strikes would be “unbelievably small,” and were unlikely to draw the United States deeper into yet another Middle Eastern war, the mere possibility that they might do so was too great a risk for many Americans who had grown weary of inconclusive conflicts that didn’t serve U.S. vital security interests. They bombarded congressional offices with phone calls and emails saying “stay out.” At the time, Newt Gingrich was one of a very few Washington insiders who made a succinct case against intervention on behalf of the wider public: “A) I don’t understand why it’s our problem, B) I doubt very much that we can fix it, and C) the guys who are against Assad strike me as about as sick as Assad is.”

In the face of such opposition, President Obama’s decision to submit the question to Congress effectively shelved the idea.

Hawks were dismayed, though most blamed Barack Obama for taking public attitudes into account. The political class would have preferred that he simply ignore the fact that Americans weren’t clamoring for more war, much as they wanted him to disregard popular sentiment with respect to leaving U.S. troops in Iraq. 

Now, according to Secretary of State Rex Tillerson, the United States is embarked on a much wider mission in Syria, with the ultimate object of regime change there. The U.S. military presence will be “conditions-based,” meaning open-ended – and, if at all like Iraq and Afghanistan, effectively indefinite. He concedes that some Americans are opposed, but claims it is vital for the United States to remain engaged.

It isn’t vital. Who rules Syria, and whether they do so poorly or well, does not affect the lives and safety of Americans. Nor is it clear that a U.S. military presence on the ground in Syria serves a humanitarian purpose, and is necessary to bring an end to the civil war. It may, in fact, prolong the conflict, and thus the suffering of the Syrian people.

Who exactly is advising the Trump administration on this strategy? Where do these ideas come from? They bear no resemblance to positions that Donald Trump adopted as candidate. In October 2016, for example, he accused Hillary Clinton of risking World War III with Russia by calling for Assad’s ouster. Back then, Trump was content to leave Assad in power, and focus American attention and firepower on ISIS.

Now, barely 15 months later, Assad has reasserted control in parts of Syria, which means dislodging him will be even harder. ISIS, meanwhile, has been shattered, which makes the rationale for U.S. military action even less compelling. The American people aren’t looking to give the already-overburdened U.S. military more tasks to accomplish, and yet that is precisely what the Trump administration appears to be doing.

Why are they moving the goalposts? An explanation by the Secretary of State before a friendly audience at the Hoover Institution should not suffice. At a minimum, Tillerson’s latest announcement should prompt a wide-ranging debate over U.S. goals in Syria, and throughout the Middle East (to include the shameful Saudi-led war in Yemen). In short, Congress should reassert its oversight role, and demand that the Trump administration explain the reasons behind this major policy shift.

If that occurs, it is reasonable to expect, as in 2013, widespread public skepticism. If anything, Americans might be even more opposed, and incensed by the apparent bait-and-switch. And at least some of the people who voted for Donald Trump believing he would be less inclined than Hillary Clinton to expand existing wars, and start new ones, should be feeling a case of buyer’s remorse. He promised change, but he hasn’t delivered

 

Trade negotiators from Canada, Mexico and the United States will meet in Montreal next week for a crucial round of talks on renegotiating NAFTA. This is the 6th round of negotiations, and the major demands and proposals are now on the table. Can the parties begin to work out their differences and make progress towards a deal? Here are some key issues to watch.

Poison Pills

The United States (i.e., the Trump administration) was the only NAFTA country that was pushing to renegotiate the existing agreement, so its views are important for determining whether a new NAFTA can be worked out. The Trump administration has made a number of proposals that are probably unacceptable to Canada and Mexico (and also to many members of Congress, as well as other groups). These have been referred to as “poison pills,” with some speculation that the administration offered them in the hopes that the proposals would kill the talks and give the U.S. an excuse to withdraw from NAFTA. Three of the biggest poison pills are:

– A weaker enforcement mechanism for policing violations of the agreement (not weaker than most areas of international law, but a big step backwards from what currently exists in U.S. trade agreements).

– A “sunset clause” that would have the agreement expire after five years unless the parties affirmatively decided to renew it.

– A requirement that in order for automobiles to benefit from the zero tariffs under NAFTA, 50% of their content must be from U.S. sources.

The key question for these proposals is whether the U.S. is going to keep insisting on them, or whether it is willing to accept less (e.g., a review mechanism rather than an automatic expiration clause) or even, ideally, to abandon the proposals completely.

Market Opening/Closing

A frustrating part of trade negotiations is how countries bargain over liberalization: one country liberalizes only if others do so. If they were smart, they would be competing to see who could liberalize the most and the fastest. But that’s not where we are with trade politics right now.

Instead, in the NAFTA renegotiation, some of the U.S. proposals are designed to scale back existing liberalization. For example, the U.S. wants more flexibility to follow Buy America rules in government procurement; and it wants a higher level of regional content (i.e., from Canada, Mexico, and the U.S.) in automobiles in order for them to qualify for NAFTA’s zero tariffs (this is a less egregious variation on the U.S. content requirement noted above).

At the same time, the U.S. is also pushing for market opening by others, including a demand that Canada remove some restrictions on dairy imports. Asking trading partners to open their markets is a more traditional approach to trade negotiations, and would probably get much more emphasis in these trade negotiations from any other U.S. administration. For example, the U.S. could be prodding Canada and Mexico to open up various markets for services (e.g., legal and medical services).

Specialized International Courts

While some of the U.S. NAFTA proposals are controversial and hugely problematic, others are controversial but actually have some basis. In this regard, in addition to the proposals related to basic enforcement provisions noted above, the U.S. is also complaining about two other dispute mechanisms in NAFTA, referred to by the chapters in which they fall: Chapter 19 and Chapter 11.

Chapter 19 involves a special review mechanism for domestic anti-dumping/countervailing duties that was originally demanded by Canada as part of the Canada - U.S. FTA, and was then carried over into NAFTA. Normally, anti-dumping/countervailing duties can be appealed to domestic courts; under Chapter 19, they can also be appealed to a special NAFTA panel of experts, which considers the consistency of the agency decisions with domestic law. It is arguably unconstitutional to have an international court apply U.S. law in this way, and it is not clear that the NAFTA panels offer stricter oversight than U.S. courts do. The Trump administration wants to eliminate these provisions; the Canadians are pretty adamant about keeping them.

Chapter 11 contains the notorious investor state dispute settlement mechanism. In my view, the economic value of these provisions is uncertain at best, and they are not worth the uproar they cause. This is something that the U.S. has pushed for in the past, but the Trump administration seems to be reconsidering it. 

Modernizing

Finally, there is the easy part of the NAFTA renegotiation: modernizing it. NAFTA was negotiated in the early 1990s. Since then, the economy has changed a lot, and trade agreements have evolved. One relatively simple part of NAFTA will be to borrow provisions from other recent agreements, covering issues such as state-owned enterprises, e-commerce, labor, and the environment. 

******************************************

There are lots of rumors these days about whether the Trump administration is going to withdraw from NAFTA, whether the Canadians think the Trump administration is going to withdraw from NAFTA, and (in a tweet that I remember but can’t seem to dig up) what the Trump administration thinks about the Canadians thinking that the Trump administration is going to withdraw from NAFTA. I don’t know what to make of any of that. I’m just going to focus on the substance of Round 6, after which we may have a better sense of what is actually possible and likely here.

Writing in The Hill last week, retired Brigadier General John Adams declared global overcapacity in the aluminum sector to be a national security threat and urged President Trump to “impose meaningful relief” for domestic industry. With Trump widely expected to make a decision in the coming months—or perhaps even sooner—on whether to impose new restrictions on aluminum imports as part of a Section 232 investigation initiated last year, it’s the type of argument we are likely to see more of in the weeks ahead. While no one should doubt the sincerity of Adams’ concern for U.S. national security, his description of the industry’s travails and claim that its salvation lies in the raising of import barriers is deserving of closer scrutiny.

Stating that aluminum prices have “come under pressure” since 2009, Adams notes that this correlates with both the addition of 17 million metric tons of new capacity by state-owned smelters and a 60 percent reduction in U.S. primary aluminum (produced directly from mined ore) capacity along with the loss of over 4,000 jobs. Perhaps more alarmingly, he points out that the lone U.S. smelter capable of producing “high-purity, American-made aluminum” used in a variety of defense platforms is currently operating “at only 40 percent capacity and under great economic pressure to compete with Chinese dumping.”

In case the implied narrative of imports driving U.S. job losses wasn’t already obvious Adams later makes it plain:

Illegally-subsidized foreign aluminum is distorting global pricing and flooding American marketplaces, driving down domestic prices, depleting production, and forcing manufacturing facilities across the nation to close their doors. Relief is needed and needed soon to ensure that this historic and vital American industry can stay afloat. Relief against China alone won’t revitalize the industry.

…Imagine a world where we are 100 percent dependent on China, the United Arab Emirates and Russia to equip our armed forces and build critical infrastructure. We need broad and effective relief to protect thousands of American jobs and ensure that the U.S. primary aluminum industry will continue to play a vital role in U.S. national security.

This seemingly grim picture is at best incomplete, beginning with the fact that any decline in the price of aluminum is a boon to the many U.S. industries—ranging from beer cans to cars to airplanes—for which the commodity is an important production input. Talk of rising capacity among state-owned firms and prices under pressure, meanwhile, suggests a notable decline in the historical price of this commodity, but that is at odds with the historical data. For over two years aluminum has seen a steady upward trend in price, and it can only be considered cheap relative to the commodities super-cycle of the last decade.

 

If the price of aluminum is not particularly cheap by historical standards, what then explains the decline in U.S. production capacity and loss of jobs? It helps to first understand that a key variable in the production cost of aluminum is electricity (aluminum smelters account for roughly 3.5 percent of global electric power consumption) and that aluminum smelters are frequently placed in close proximity to cheap sources of power such as hydroelectric. Electricity prices in the United States, however, are more expensive than those which can be found elsewhere, prompting a search by U.S. firms for lower cost locales in order to remain competitive. Simply put, much of the industry has left for greener, or rather cheaper, pastures as noted by The New York Times:

Alcoa, formerly the Aluminum Company of America, and another American company, Century Aluminum, have opened factories like this in Iceland, and closed factories in the United States, for a simple reason: Electricity is much cheaper here. This year, tiny Iceland is on pace to make more aluminum than the United States. So are its fellow hydropower superpowers, Canada and Norway.

Indeed, beyond Iceland Alcoa owns an additional three smelters in Quebec. It should be stressed that this is hardly an example of a “race to the bottom,” with Canada and Iceland known neither for their cheap labor or lax environmental policies.

And despite Adams’ warning of a future in which the United States is forced to rely on China, Russia, and the UAE for its defense and infrastructure needs, the top source of U.S. aluminum imports in recent years by some distance has been Canada, which supplies more aluminum to the United States than the nine next largest sources combined.

Not only is Canada the largest U.S. supplier, it is also considered such a close strategic partner that it has been designated as part of the national technology and industrial base (along with Australia and the United Kingdom) and its firms are legally obligated to supply American military contractors in exchange for their exemption to Buy American provisions. If the day ever does come that the United States cannot meet its own aluminum needs for national security, why not simply purchase from our neighbors to the north?

Such an eventuality, however, is difficult to imagine. Even if every U.S. aluminum smelter were to close, this does not necessarily mean their productive capacity has been forever lost as facilities can later be brought out of mothballs. As this industry publication notes, the United States currently has “a little more than a million tons of capacity lying idled, ready for restart if the conditions are right.” In addition, to the extent excess capacity exists in the U.S. aluminum industry this could be considered a national security asset as it allows for a quick ramping up of production should a wartime emergency arise.

Lastly, if global overcapacity is the chief culprit for the ills faced by the domestic aluminum industry as Adams claims, it is unclear how the type of remedy he seeks—“significant comprehensive relief across all aluminum imports”—is the appropriate solution. By providing an incentive for the re-opening of shuttered domestic smelters to meet demand previously filled by imports, the problem could actually be worsened as capacity is further expanded. That Canada and other foreign allies would be harmed, straining relations and leading to possible retaliatory measures, further calls the wisdom of such a move into question. Indeed, as Dan Ikenson warns, other governments likely would follow the U.S. lead and cite national security concerns of their own in order to “bestow protectionist favors on their own favored domestic interests.” The opening of this Pandora’s box, he adds, would soon lead to an unraveling of the international trading system. 

Rather than sweeping protectionist actions, the United States would be better advised to follow the advice given by the Aluminum Association of Canada in its comments on the 232 investigation (and echoed by other groups such as the National Foreign Trade Council). Emphasizing the need for a do no harm approach, the organization calls for Canada, the United States, and Europe to “engage with China within an appropriate international forum to formally assess the situation in full transparency and take action to quickly and progressively resolve the issues affecting the world aluminum market.” With China already engaged in production cuts in the aluminum sector, the potential for such talks to reach a successful conclusion should not be casually dismissed.

National security arguments are in many ways the gateway drug of protectionism, using an appeal to patriotism to convince otherwise sensible people to support self-destructive policies. So too it would be with new restrictions on the importation of aluminum, which would come at a considerable cost to the many downstream industries that rely on this commodity to produce their goods. The underlying issues which have harmed the competitiveness of U.S. aluminum smelters such as electricity costs and overseas capacity, meanwhile, would be left addressed or conceivably worsened. When it comes to new tariffs on imports of aluminum President Trump should just say no. 

If you are interested in national issues such as defense, foreign policy, and trade, and want to hold public office, you should run for Congress. If you are interested in roads, beaches, subways, and policing, you should run for city council or the state legislature.

The push to restore earmarks in Congress is led by politicians who got elected to the wrong democratic body. In a pro-earmark story today, the Washington Post highlights projects that members say justify the narrow spending set-asides:

  • “There is a 14-mile gap in Interstate 49 outside Fort Smith, Ark., and Rep. Steve Womack, who represents the area, would very much like to secure the estimated $300 million in federal taxpayer money needed to fill it.”
  • “Rep. Thomas J. Rooney (R-Fla.), who is pushing a proposal that would allow Congress to earmark money for … a pair of water projects he said have been neglected in his district: a beach restoration in an area where the Gulf of Mexico is starting to lap at homes, and repairs to the massive Herbert Hoover Dike that surrounds Lake Okeechobee.
  • “The Second Avenue Subway in New York City, which opened last year, received more than $600 million.”
  • “Dozens of police departments received money to improve their equipment and communications systems. 

I have questions for the members supporting federal spending on these projects:

  • Why doesn’t the Arkansas legislature fund the I-49?
  • If Florida beach restoration is important but neglected, why don’t landowners and city councils along the coast fund it?
  • New Yorkers may support their subway project, but why should taxpayers elsewhere pay for it? And when asked to vote on it, how could members from other states judge whether it made any sense?
  • Since policing is a crucial function of local government, wouldn’t citizens support local taxes to buy needed equipment?

The earmark issue is usually framed as a battle of the purse between federal politicians and federal bureaucrats. But the more important issue is ensuring that activities are funded at the level of government that makes the most sense. I discuss here why state and local funding makes sense for state and local activities. As for Congress, it suffers from structural failures that cause it to spend wastefully much of the time, so the less money flowing through it the better.

Last week, the House of Representatives voted to reauthorize the FISA Amendments Act—and its controversial Section 702, which establishes general warrants for wiretapping foreigners—and rejected an amendment offered by Rep. Justin Amash that would have at least required the FBI agents to obtain a warrant before sifting through the NSA’s massive database of intercepted communications for Americans’ messages. As I noted in a blog post at the time,  the few supposed “reforms” embedded in the authorization bill are cosmetic at best, and more likely will serve to actually expand the scope of warrantless surveillance. But at least Amash’s amendment got a vote, although without the benefit of much in the way of substantive debate.  

This evening the Senate is poised for a cloture vote that will advance 702 reauthorization toward passage later this week, not only with minimal debate, but without even permitting amendments to be offered.  Even supporters of the law should regard this as an extraordinary dereliction of duty.

 As Sharon Bradford Franklin of New America’s Open Technology Institute observes, we’ve learned an enormous amount about how Section 702 is used since it was last reauthorized five years ago—in part because of the now-notorious disclosures by Edward Snowden, but also in part because of the unprecedented quantity of information released since then by the government itself, whether voluntarily or in response to Freedom of Information lawsuits.  

We’ve learned about the intelligence community’s struggles to follow its own rules, and to keep the Foreign Intelligence Surveillance Court (FISC) and other oversight bodies fully and promptly informed about such “compliance incidents.”  We’ve learned about the massive number of foreigners targeted for collection under 702—more than 106,000 last year— though, despite repeated pledges from intelligence officials (ultimately repudiated last year by the new Director of National Intelligence Dan Coats) we haven’t learned how many Americans find their communications caught up in the process.

 We’ve learned about “about collection“—wherein NSA routinely intercepted Internet messages (including Americans’ messages) that were neither to nor from a foreign surveillance target, but only made reference to a target.  (When the Supreme Court blocked a challenge to the law from proceeding in the case Clapper v. Amnesty International, on standing grounds, it repeatedly cited the government’s inaccurate representation that only Americans in direct communication with a foreign target were at risk of having their communications intercepted.)  Even the normally deferential FISC eventually balked at this practice, forcing NSA to wind it down.  Yet the reauthorization bill the Senate is preparing to advance actually codifies it explicitly for the first time—requiring only that Congress be informed if it is resumed.  While it is vanishingly unlikely that Congress would actually intervene in the event of such a notice, this is likely to be read by the FISC as a congressional blessing of the practice, making its resumption more likely.  

A Senate more concerned with fulfilling its oversight responsibilities would invite extensive public debate and discussion of these issues and more, as well as proposals to address them. Instead, as we’ve seen so often with other intelligence authorities, the looming expiration of 702—which following a temporary extension is set to laps on January 19—is invoked to create a false sense of urgency: No time to debate, no time to consider alternatives, just an up or down vote on the reauthorization already approved by the House. The deadline here is, of course, entirely artificial: Congress already passed one temporary extension before its last recess, and could approve another.  Even if it did not, even if the law were to lapse, the warrantless surveillance authorized under 702 could continue uninterrupted until April.

The rush to reauthorization is particularly incongruous at a political moment when you might expect both parties to welcome the opportunity to contemplate additional checks on spying powers.  Democrats routinely worry that the Trump Administration is eager to use its control over law enforcement institutions to go after Donald Trump’s political adversaries—not least because Trump himself demands that they do so on a regular basis.  Republicans, in turn, routinely complain about an insidious “Deep State” embedded within the Justice Department and intelligence community, which they believe may have already illegally leaked information gleaned from surveillance to press as part of an effort to undermine the administration.  You might think concerns of this sort would, at the very least, make legislators more inclined to consider reforms such as requiring court approval to pull up an American’s correspondence from a vast database of foreign intelligence intercepts.  Yet for all the talk of “resistance” on the left and “Deep State” perfidy on the right, the majority in Congress seem determined to extend and expand these spying authorities—both quickly and quietly.

The Departments of Homeland Security and Justice (DHS/DOJ) released a report this morning on the threat of international terrorism.  This report was required by President Donald Trump’s executive order that, among other things, originally established the infamous travel ban.  The new DHS/DOJ report produces little new information on immigration and terrorism and portrays some misleading and meaningless statistics as important findings.  Interestingly, the draft version of the report had more interesting and useful information that was mysteriously edited out of the final public version.  It’s remarkable that, given almost a year to produce such a report and with the vast resources of the federal government combined with reams of government information unavailable to the public, that they were able to produce a report of so little of value.     

The DHS/DOJ report found that about 73 percent of those convicted of international terrorism-related offenses from 9/11 through the end of 2016 were foreign-born.  That means that 27 percent of them were native-born Americans.  By focusing exclusively on international terrorism-related charges, this report intentionally ignores domestic terrorists unaffiliated with international terrorists.  Thus, the results of the DHS/DOJ report are, at best, a snapshot of the international subset of terrorism that ignores the purely domestic variety. 

The DHS/DOJ report ignores the most important statistic: how many people were actually killed by these terrorists on U.S. soil.  In our updated terrorism information that runs through the end of 2017, we found that a total of 155 people were killed on U.S. soil in terrorist attacks since January 1, 2002, 34 of them by foreign-born terrorists and 121 of them by domestic terrorists (going back to September 12, 2001 does not add any deaths by identifiable terrorists on U.S. soil but would diminish the chance of dying, so I excluded it from this blog post to bias the results against me).  Since the beginning of 2002, native-born Americans were responsible for 78 percent of all murders in terrorist attacks committed on U.S. soil while foreign-born terrorists only committed 22 percent.  Including the actual number of deaths caused by terrorists flips the DHS/DOJ statistics on its head.     

From the beginning of 2002 through 2017, about the period of time covered by the DHS/DOJ report, the chance of being murdered in a terrorist attack committed by a native-born American on U.S. soil was about one in 40.6 million per year.  During the same period, the chance of being murdered by a foreign-born terrorist was about 145 million per year.  The total chance was about one in 32 million a year.  To put that one in 32 million a year chance in perspective, the annual chance of being murdered in a non-terrorist homicide was about one in 19,325 per year or about 1,641 times as great as being killed in any terrorist attack since 9/11.  These numbers are based on updated and expanded data that we plan on publishing in the near future (available upon request). 

The DHS/DOJ report found that at least 549 people were convicted of international terrorism-related charges in federal court from 9/11 to the end of 2016.  These are fewer than the 627 convictions that the DOJ reported through the end of 2015.  What accounts for the 78 fewer convictions over a longer period?  The DHS/DOJ report does not attempt to reconcile their report here with what they have reported previously.  Furthermore, the DHS/DOJ report does not supply the relevant information about the numbers of convictions for terrorism-related offenses, their names, or the actual offenses they committed.  The DHS/DOJ report should have published this information just as the government has done in the past in request to FOIAs.

The DHS/DOJ relies on “terrorism-related convictions” as their important metric, a definition that encompasses numerous convictions that have nothing to do with terrorism.  There is no definition of “terrorism-related” as a crime in U.S. statutes.  The phrase “terrorism-related” appears mostly in reference to actions of government officials in response to terrorism such as a “terrorism-related travel advisory.”  The anti-terrorism Information Sharing Environment, which integrates information which the GAO, defines “terrorism-related” as relating to “terrorism, homeland security, and law enforcement, as well as other information.” That is a definition that so broad “terrorism-related” is not synonymous with “terrorism.” 

The DHS/DOJ report reveals that the DHS had 2,554 encounters with individuals on the terrorist watch list via the FBI’s Terrorists Screening Database (TSDB) in FY 2017.  That means that DHS could have had multiple encounters with the same individuals who were all counted as separate “encounters.”  The TSDB includes the identities of hundreds of thousands of known and suspected terrorists who are both native-born Americans, foreign-born travelers and immigrants to the United States, and foreigners who have not traveled here.  According to a DOJ audit of the TSDB, frontline officers conducted about 270 million checks against the TSDB every month in 2007 with a total of about 3.24 billion checks per year.  Assuming those numbers were unchanged for FY 2017, even though that number has likely increased, and that only 10 percent of them were conducted by DHS, means that about 0.0008 percent of all TSDB checks conducted by DHS resulted in a TSDB hit, or about one for about every 127,000 checks.  That does sound dangerous until you realize that people flagged by the TSDB are not necessarily terrorists.  Even U.S. Senators and Congressmen have been included on the TSDB list.  Getting one’s name on the TSDB list is easy but getting off is very difficult.  As the DOJ audit of the TSDB noted:

[O]ur file review found that the State Department and the DHS’s Customs and Border Protection did not revise encounter records in a screening database in a timely fashion to reflect modified or removed terrorist identities.

 

Thus, the DHS/DOJ reported TSDB encounters statistic is virtually meaningless.  It’s a count of people the government is concerned about without evidence or a clear way of being removed.  The DHS/DOJ report could have told us how many of these folks actually committed a terrorist attack, eventually did so over time, or were arrested for a terrorism offense but they missed that opportunity. 

The DHS/DOJ report on international terrorism reveals little new information on the international terrorist threat to Americans on U.S. soil.  Unusual for a government report on terrorism, it isn’t even capable of providing many scary-sounding statistics that could frighten people.  While that last point is an improvement, future reports on this topic should seek to provide information on this important topic that isn’t publicly known.  This report fails to do that.

As an optimist, and I hereby proclaim 2018 “Year of Federal Spending Cuts.” To kick-off the celebrations, Cato has published Downsizing Federal Government Spending.

The new book discusses federal spending cuts on agriculture, education, health care, infrastructure, welfare, and many other activities. The cuts would save money, boost growth, and increase freedom.

Congress needs to kick the deficit-spending habit, and the new book can help kick-start reforms. Do lawmakers really want to kick younger generations in the teeth by growing the debt? I hope not, but the way some of them spend, it’s as if they know they will kick the bucket before the bill comes due.

You will get a kick out of this book. The kicker? It’s just $9.99 from Amazon.com

The federal government owns 640 million acres of land—mainly in the West—which is 28 percent of land in the United States. For more than a century after the nation’s founding, the federal government aimed to sell or give away western lands to individuals, businesses, and state governments. But by the turn of the 20th century, federal policy came under the sway of progressives, who favored increased federal control.

Progressives had a misguided notion that federal ownership would be efficient and environmentally sound. Broadly speaking, they were wrong. Experience has shown that federal agencies mismanage land from both economic and environmental perspectives, as discussed here and here. The solution is to devolve ownership of most federal land to the states and private sector.

The Bureau of Land Management (BLM) owns about 250 million acres of land, of which about 160 million acres are used for livestock grazing. Cato scholar Steve Hanke championed BLM land privatization as an economist for President Ronald Reagan. He proposed that ranchers be allowed to buy the grazing land that they currently rent from the BLM.

Privatization would create benefits by securing property rights. Currently, ranchers are uncertain about their future access to the federal grazing lands they use, so they have incentives to overstock the lands and disincentives to make capital improvements. Privatization would allow ranchers to plan for the best economic and environmental rangeland management over the long term.

In a new Forbes article, Hanke discusses the privatization proposal he designed in the 1980s, a proposal that Reagan approved of. Hanke’s reform would be fair and efficient for both ranchers and the government. Here are some excerpts:

On Jan. 8, Judge Gloria M. Navarro of the Federal District Court in Las Vegas dismissed charges against Cliven Bundy and his sons Ammon and Ryan, as well as a supporter Ryan W. Payne. The case stemmed from a 2014 armed standoff at the Bundy ranch in Bunkerville, Nevada. The standoff arose over a dispute about government grazing fees, pitting the Bundys against federal officials.

The dispute would not have occurred if the proposal I developed for President Reagan when I served as Senior Economist on his Council of Economic Advisers had been implemented. The proposal was contained in the President’s Budget Message for 1983 fiscal year.

…Until the passage of the Taylor Grazing Act in 1934, the public domain was operated as a large commons. Since the Act, a more orderly method of utilization has been in effect. For the right to use public grazing lands, which cover approximately 155 million acres, ranchers must acquire grazing permits. To obtain these permits, ranchers must pay annual rents to the U.S. Government. By custom, the grazing permits, which number approximately 24,500, are attached to specific parcels of private land.

The linkage between public permits and private land has had a profound impact on the market for private land. The annual public grazing fees have been set below market-clearing levels. As a result, the grazing permit market has been cleared—supply has been equated with demand—not through the public grazing permit market itself, but through the market for the private lands that are linked to the public permits. So, the difference between the public grazing fees that are charged and those that would clear the market for grazing permits has been capitalized into the value of the private lands that permits are attached to.

The linkage, through the capitalization process, between the market for public permits and that for private land has important implications. With the exception of those who obtained the original permits, all ranchers have had to pay two prices for their public permits—a public price, in the form of an annual grazing fee, and a private price, in the form of a premium for their private land.

…To privatize public grazing lands and transfer public grazing permits (surface rights) to private ranchers on an equitable basis, a lump-sum amount should be charged to ranchers. This charge should be set so that it is equivalent, in present value terms, to the amount that the U.S. government would receive in grazing fees over time if the government retained title to the lands and continued to charge an annual grazing fee or rent. In effect, the government would be put in a position in which it is indifferent between receiving a lump-sum payment today or a stream of annual rents over time. Moreover, ranchers would be charged for only that portion of the permits’ value that had not already been paid for through premiums for private land.

…[W]hat would be the benefits associated with this privatization proposal?

First, the productivity of federal grazing lands would increase.

Second, federal revenues would be generated. Instead of receiving annual grazing fees, the federal government would receive an equivalent lump-sum payment.

Third, the annual federal costs…exceed the annual revenues generated from federal grazing lands. Therefore, privatization would eliminate negative cash flows for the federal government. This would obviously benefit all U.S. taxpayers, who must now pay taxes to support the federal government’s retention of public grazing lands.

Lastly, a state and local property tax base would be created. Western dependence on Washington, D.C. would be reduced and federalism would be enhanced.

Rachel Campos-Duffy, the wife of Rep. Sean Duffy (R-WI), cohosting “Outnumbered” on Fox News Friday, complained that Democrats “make our country look bad” by revealing what President Trump said in a meeting with members of Congress:

“I still have a problem with people in a private meeting going out and saying what the president said….It makes our country look bad. I think the Democrats, in this case, should have used some discretion. And even if he did say something like that, not repeat it for the benefit of the country.”

Her comments reminded me of one of my favorite parliamentary exchanges. 

Helen Suzman, the longtime leader of the parliamentary opposition to apartheid, rarely won any votes in the South African parliament. But she did use her position to advocate for human rights and to ask tough questions. 

In a famous exchange a certain minister shouted: “You put these questions just to embarrass South Africa overseas.” To which she coolly replied: “It is not my questions that embarrass South Africa – it is your answers.” 

Republicans who don’t want the country embarrassed by the president’s insult to dozens of countries and millions of Americans should encourage him not to issue such insults.

The Trump administration will release its long-waited infrastructure plan in coming weeks. The plan is expected to include $200 billion over 10 years of federal funding. Where will the money come from? The president has pondered raising the federal gas tax.

Revenues from the 18.4 cent-per-gallon federal gas tax go into the Highway Trust Fund, and then are dished out to the states. But 98 percent of U.S. streets and highways are owned by state and local governments, and the owners should do the funding. States that need to improve their highways can increase their own gas taxes, sales taxes, issue debt, add user charges, or pursue public-private partnerships.

There is no advantage in raising federal highway revenues rather than the states raising their own. The states can tackle their own infrastructure challenges, and about half of them have raised their transportation taxes in the past five years.

Supporters of a federal gas tax hike say that the tax has not been raised since 1993, and its real value has been eroded by inflation. That is true. But the federal gas tax rate more than quadrupled between 1983 and 1993 from 4 cents to 18.4 cents, as shown in the chart below. The 4-cent rate would be 9.8 cents in today’s dollars, so the real gas tax rate has risen substantially since the early 1980s.

The chart shows that the states have steadily raised their own gas taxes in recent years. API discusses state gas taxes here, and they emailed me data back to 1994. (I’ve interpolated a few missing years). The state average—currently 33 cents—includes both gasoline excise taxes and other taxes on gasoline.

I hope Trump does not go down the road of gas tax increases. Pumping more money through the federal bureaucracies would fuel more top-down planning and inefficiency. Funding for highways and other infrastructure should be handled by state and local governments and the private sector.  

More on infrastructure here and here

As the trade paparazzi speculate about whether and when Trump will impose trade sanctions on China and what those sanctions will be, a trade war is already widening right under their noses. For more than a decade, the United States and China have been quietly waging a trade war in the shadows of public policy.

China’s pursuit of technological know-how has included objectionable tactics, such as the implementation of discriminatory innovation policies, intellectual property theft, forced technology transfer, and cyber-espionage. The U.S. government’s response has included the informal decision to put the U.S. market off limits to China’s most successful technology companies and to make U.S. technology more difficult for Chinese companies to acquire. What that means is that globally successful information and communication technology (ICT) companies, such as Huawei Technologies, have been informally blacklisted from selling network gear to America’s telecommunications companies, and selling computers, smartphones, and other electronic devices to U.S. consumers. 

It also means that the Committee on Foreign Investment in the United States (CFIUS), through imminent legislative and regulatory changes, will soon complete its metamorphosis from a body that reviews proposed foreign acquisitions and helps the parties mitigate potential security risks associated with those deals into an insurmountable obstacle to any significant acquisitions of U.S. technology by Chinese companies.

I wrote about this metastasizing trade war and its adverse repercussions in Forbes the other day, but wanted to provide an update on the rapidly changing landscape.

On January 9, Rep. Mike Conaway (R, TX, 11th) introduced legislation that not only forbids U.S. government agencies from purchasing ICT equipment produced by Huawei, ZTE (another Chinese ICT company), or their subsidiaries and affiliates, but also forbids those agencies from doing business with any entity that uses equipment produced by those companies.

Should HR 4747, the “Defending U.S. Government Communications Act,” become law, it’s difficult to imagine that Beijing would remain welcoming of U.S. technology companies and products in China for much longer.

In my estimation, this is going to be the most explosive trade issue of 2018 and beyond.

 

 

President Trump is promoting comprehensive immigration legislation drafted by key House Republicans that touches on all aspects of the system. The bill would provide legal status to young immigrants, cut legal immigration, and provide for more border agents, but one provision should not be ignored: a biometric exit system. It’s a big waste of money, and Congress should resist efforts to fund it.

Biometric exit’s logistics are difficult

Current law requires the Department of Homeland Security (DHS) to collect a biometric identifier—in practice, fingerprints and digital photos—from foreign visitors entering and leaving the United States. In theory, this system would allow them to identify individuals who overstay their temporary visas. After 9/11, DHS implemented the entry half, but it still has not rolled out a system for those exiting.

The biometric entry system—known as US-VISIT—was relatively easy to implement because foreign visitors to the United States already underwent screening at ports of entry, and as a security tool, it made sense. It allows DHS to confirm that a person trying to enter is the same person who applied for a visa overseas, which undermined visa fraud and the use of aliases in the visa entry process.

The biometric exit system has no similarly easy path to implementation. Airports are not set up to screen travelers exiting the United States. As the Government Accountability Office (GAO) has found, “airports generally do not have designated and secure exit areas for conducting outbound immigration inspections, nor are there checkpoints for travelers to pass through where their departure is recorded by a U.S. immigration officer.”

At land ports of entry, the situation is even more hopeless. GAO found that “many land POEs do not have sufficient space to deploy equipment and staff.” Moreover, a biometric exit system would require motorists to stop and physically leave their vehicles. GAO notes that this “would cause extensive delays.” DHS did test biometric exit kiosks for pedestrian traffic, but these failed because agents had to spend too much time helping people and desert conditions damaged the equipment.

Biometric exit is an unnecessary expense

Nor does biometric exit have the same benefits. DHS already tracks most overstays using airline flight manifests. Airlines send DHS the names of anyone who has boarded an outbound flight, and DHS compares this information against US-VISIT entry information. In 2016, this flight manifest system identified 544,676 people as having overstayed and not left the country—1 percent of all air and sea entries.

While some share of these people—mainly Canadians and Mexicans—may have left through ports of entry, this system identifies a massive pool of people who DHS could target for removal operations, but they don’t. DHS spends only 2 percent of its time investigating overstays. Of the nearly 700,000 foreign visitors that DHS has identified as overstays from 2004 to 2012, it arrested only 9,000 (1.2 percent).

Expanding an exit system to land ports of entry would only add to the massive stack of uninvestigated visa overstays. Biometric exit without much more aggressive interior enforcement serves little purpose, while coming at a great cost. The Senate Judiciary Committee in 2013 obtained an estimate from DHS that full biometric exit would cost $25 billion—airports would cost $6.4 billion alone.

This only includes the cost to the government. It ignores costs to travelers and businesses who are delayed leaving the country. Delays entering the United States along the southern border already cost the U.S. economy billions—more than $6 billion in California alone. Congress should work first to reduce these delays that have serious negative impacts on the economy before imposing an expensive system with a dubious purpose.

Overstay crackdown isn’t worth it

Some might argue that the biometric exit would be valuable if DHS simply spent more time targeting overstays. But the department’s priorities make sense. Every visitor to the United States receives thorough vetting before entry, while people who cross the border do not. Thus, starting with border crossers is logical from a security perspective.

Overstay investigations are exceptionally labor intensive for low priority offenders. Consider that of the 44,500 overstay leads that DHS investigated from 2004 to 2012, it arrested just 9,000, mainly because nearly half ended up leaving the country or adjusting to a legal status before an apprehension was made. Another quarter were never located. This is a huge investment for few arrests.

By contrast, DHS currently apprehends illegal immigrants—including some overstays—mainly after states and localities arrest them for local crimes. Prioritizing overstays would mean passing on people who 1) are guaranteed arrests and 2) are alleged to have committed some other violation of law beyond immigration offense. To target both overstays and those arrested by local police would require far more resources than Congress currently spends on enforcement. Even then, it’s not clear that overstays would be DHS’s priority. There are criminal fugitives who could be tracked down.

Biometric exit is a costly enforcement hammer without any nails to strike. DHS is already well aware of many visa overstays, but prioritizing them would mean ignoring higher priority and easier arrests. Without dramatic reductions in the illegal population, a crackdown on visa overstays will never make much sense, making biometric exit almost entirely superfluous.

With school board elections approaching, Tammy Holland purchased ad space in her local paper to inform her neighbors about their available options when it came time to vote. For this brazen exercise of her free speech rights, Ms. Holland found herself forced to expend considerable time and resources to defend her actions in court, twice. You might wonder how this could happen in a “free” country that ostensibly enjoys the blessings of the First Amendment. Unfortunately, Colorado’s byzantine system of campaign and political finance regulations not only turn a blind eye to First Amendment concerns, but actively incentivizes politically motivated, retaliatory litigation. 

Colorado is unique in being the only state to effectively outsource enforcement of its campaign finance regulations by allowing “any person who believes” that campaign finance laws are being violated to “file a written complaint with the secretary of state.” Filing a complaint triggers a litigation process culminating in a court hearing before an Administrative Law Judge, much like a trial. After Ms. Holland was dragged into court on the whim of individuals who took issue with her speech, Campaign Integrity Watchdog (CIW)—an outside group that was not a party to the litigation—filed a motion requesting the court seal otherwise public records because they contain information related to campaign finance settlements. If the court grants CIW’s request, the public will never be able to access vital information about how these cases are resolved. In an effort to protect the public’s right to know, Cato has joined the Reason Foundation to file an objection to CIW’s motion.

Citizens should be able to access information about how their campaign finance laws are enforced. As the United States Supreme Court has long held, it is presumptively the right of the public to access and know the contents of court filings. Judges are obligated to avoid secret trials, which are anathema to a free society. And, in the context of Colorado’s campaign finance laws, which encourage individuals to function as an arm of the state by instructing them to “prosecute” perceived violations, it is doubly important that the public have access to relevant court filings and records. Denying CIW’s motion and allowing access remains faithful to the presumption that, in the criminal context, plea agreements should be open. Sealing the records would contravene the long-established common law right of access to judicial records and the local rules of the District Court of Colorado. In the interest of transparency, public access, and freedom from political prosecution, CIW’s motion to restrict should be denied.

Readers of this blog may recall Cato’s filing an amicus brief for an appeal in the Eighth Circuit supporting two Missouri women’s challenge to state requirements that they become licensed as cosmetologists or barbers before being allowed to work as African-style hair braiders. Obtaining the mandatory license from the Missouri Board of Cosmetology & Barber Examiners entailed undergoing a minimum of 1,000 hours of mostly irrelevant training and passing an exam with both written and “practical” (term used loosely) components. 

Not only is over 90 percent of the required training completely inapplicable to the practice of African-style hair braiding, but seven of the nine board members are barbers, cosmetologists, or cosmetology school owners with a direct financial incentive to limit competition.

None of that mattered to the three judges on the Eighth Circuit panel, who yesterday after a full year of foot-dragging issued a perfunctory opinion upholding the district court ruling in the board’s favor. Instead of finally providing two aspiring entrepreneurs their day in court before a neutral arbiter, this ruling continues the pattern of courts’ violating bedrock due-process principles by rubber-stamping occupational regulations under the flimsiest of rationales.

Beginning with a single footnote in the 1938 case United States v. Carolene Products Co., the Supreme Court has scrutinized rights violations differently depending on how it classifies the right in question and whether the violation harmed “discreet and insular minorities.” (Ironically, the plaintiffs in Niang are both women and African Americans—two classes traditionally protected under this principle.) For a law that infringes so-called “fundamental” rights, courts apply what is known as “strict scrutiny” and require governments to prove that the law is narrowly tailored toward achieving a compelling government interest. 

On the other end of the spectrum are economic rights that courts have decided are less important, with infringements only being reviewed under the much less rigorous “rational basis” standard. Under this lower standard, it is up to the person challenging the law to prove that it is not “rationally related” to a “legitimate” (real or imagined) government interest. 

In 1955, the Supreme Court extended this standard to new extremes in Williamson v. Lee Optical Co., upholding a law that allowed only optometrists and ophthalmologists (but not mere opticians) to fit or duplicate lenses for glasses. After conjuring a number of potential justifications, the Court dismissively ruled that it was “enough that there is an evil at hand for correction, and that it might be thought that the particular legislative measure was a rational way to correct it (emphasis added).” While the entire concept of tiered scrutiny is itself deeply flawed, the district and now Circuit courts in Niang failed to meaningfully apply even the over-deferential rational basis standard, choosing instead to parrot (and even surpass!) Lee Optical as a means of tipping the balance further in favor of the Board.

In its initial ruling upholding the challenged licensing scheme, the district court engaged in factually unsupported speculation and invented justifications that the board itself had failed to imagine, thus denying the challengers any way to challenge either the rationality of the government’s means or the legitimacy of its ends. Now, by reiterating that the district court was “not bound to consider only the stated purpose of a legislature,” the Eighth Circuit has blessed the practice of trial judges’ acting as the government’s de facto co-counsel. 

Even more outrageously, the opinion cited the absurd language from FCC v. Beach Communications (1993) holding that challengers must not only refute any justifications actually advanced by the state, but also negate “every conceivable basis which might support” the statute or regulation under review. What are the actual limits of this amorphous standard? Could a court rationalize requiring a hair braider to obtain a degree in economics to properly price her services? A medical degree with experience in pain management in order to protect the tender-headed? Mandatory viewing of 80’s hair metal videos in order to warn against the dangers of hair styling gone terribly wrong? 

Not only must such decidedly irrational rationales be addressed, but challengers apparently must also invent time travel in order to challenge judicial justifications that only appear after all briefing and argument has been completed!

In any event, this will be appealed to the Supreme Court, where the justices will have the opportunity to reevaluate both the proper level of scrutiny used to assess occupational licensing and how levels of scrutiny are to be applied by courts more broadly. And while the panel opinion is certainly troubling, legal scholar and Cato senior fellow Randy Barnett offered an important reminder:

Court of Appeals judges are limited by precedent. We need [Supreme Court] Justices who will reconsider this constitutional wrong turn. But decisions like this don’t tell us if they will if elevated. And sadly neither will confirmation hearings.

One further disturbing aspect of the ruling is thus that one of the panelists, Judge Steven Colloton, appears on President Trump’s list of potential Supreme Court nominees. By contrast, another member of the Trump shortlist, newly confirmed Fifth Circuit Judge Don Willett, wrote a concurrence while on the Texas Supreme Court that addressed this very issue of overly burdensome occupational licensing in a manner that properly considered plaintiffs’ right to earn an honest living in the face of arbitrary government regulations.

If nothing else, Niang should remind us all of the need for substantive debate at future judicial confirmation hearings, not frivolous demagoguery.

Our thanks to research assistant Anthony Gruzdis for his help with the post.

Donald Trump’s whiplash-inducing Twitter comments about the surveillance legislation his administration had just endorsed didn’t stop the House of Representatives from approving a bill to reauthorize the FISA Amendments Act for another six years, but if you watched the floor debate, you might come away thinking civil libertarians won at least a few concessions in the process. Defenders of the statute’s controversial Section 702, which authorizes warrantless survellance of foreigners’ communications, rejected a proposal to require FBI agents to seek a warrant before querying the vast 702 database for Americans’ communications—a practice critics have dubbed a “backdoor search”—but did accept a narrower warrant requirement for queries conducted for criminal investigations unrelated to national security. Is this, as the bill’s boosters repeatedly insistence, a “compromise” that should provide some small consolation to civil libertarians?

Alas, no. There’s a good reason you won’t find any privacy advocates cheering even a partial victory following Thursday’s vote.  First, as I noted back in October, such a narrow warrant requirement would do almost nothing to prevent abuses of the sort it’s most reasonable to worry about: historical abuses of spying power have nearly all been clothed in invocations of national security.  But it’s worse than that.  The limited warrant requirement in the House bill not only exempts a potpourri of ordinary crimes—among them any involving the risk of death or serious injury, cybersecurity, or offenses against minors—it applies only to what are known as “predicated” or “full” investigations.  

What this means, perversely, is that when FBI agents are conducting “preliminary” investigations—which are essentially inquiries into whether a crime worth investigating may have been committed—they are free to search for Americans’ intercepted communciations.  The requirement to obtain a warrant kicks in only when there is enough evidence of wrongdoing—a “factual predicate”—to open a full-blown criminal investigation.  In other words, Americans will actually enjoy greater privacy protections when the government has evidence they’re involved in criminal activity.  That should seem inherently rather backwards, but it also sets up some pretty terrible incentives.  In effect, it tells investigators: “You’d better go hunting for people’s private communications in the preliminary stages of an inquiry, when it’s less clear who or what actually merits scrutiny, because once you’ve developed actual evidence you won’t be able to do it without jumping through additional hoops.”  This inverts the normal progression of investigations, where more intrusive methods become available as evidence of criminal conduct accumulates.

This also incentivizes the unseemly practice of “parallel construction,” wherein information obtained by intelligence methods is passed along to ordinary law enforcement agencies, which then conceal its intelligence origins, often fabricating an alternative story of how that information was discovered before bringing a case to court. As a new report from the group Human Rights Watch details, the practice appears to be disturbingly routine, despite the serious and obvious due process questions it raises. Now Congress is poised to give explicity statutory blessing to the warrantless querying of intelligence intercepts for ordinary criminal investigative purposes.  A probable unintended consqeuence is to make parallel construction even more attractive: agents can develop preliminary leads without being burdened by court oversight, then offload the task of building a case to bring before a judge on state and local authorities (or other federal agencies, such as the Drug Enforcement Administration).  

Finally, it’s worth noting a tension in the arguments offered by 702’s defenders that came out with unusual clarity in Thursday’s floor debate.  One representative after another insisted that civil liberties concerns about 702 were misplaced since, after all, it was focused on “targeting” only foreigners on foreign soil.  Yet again and again, the very same representatives insisted that the intelligence value of 702 would be “crippled” if the government could not routinely query the database of intercepted communications for information about Americans.  It does not take advanced training in logic to see that those claims cannot both be true. 

Pages